Wells Fargo, once the most valuable bank, was outstripped by J.P. Morgan Chase
Tuesday, as the former struggled to contain fallout from a massive fraud scandal.
As a result, Warren Buffett’s Berkshire Hathaway
has lost enough to fund a new tech unicorn from Wells Fargo’s troubles over the past week—$1.4 billion in all, as of the close of trading on Tuesday, when Wells Fargo’s shares dipped 3.3%. Berkshire is the bank’s single largest shareholder, with 9.4% of the company, a stake that was worth was worth $22.7 billion at the end of June.
Wells Fargo has a market cap of $231.6 billion in early trading Wednesday, falling short of J.P. Morgan’s $239.8 billion.
Shares of Wells Fargo have slipped 5.68% since since regulatory authorities first revealed that the bank created millions of credit card and deposit accounts without consumer permission to satiate the firm’s appetite for cross selling—a technique Wells Fargo had so much success with that much of Wall Street could only look on with envy.
Wells Fargo later revealed that it had fired some 5,300 employees in relation to the investigation, while Fortune reported that the executive heading the branch responsible for the misconduct, Carrie Tolstedt, would still be walking into retirement with $124.6 million. Some shareholders are now calling for the bank to claw back senior executive bonuses, The Financial Times reported.
In the aftermath, Wells Fargo decided to temporarily scale back on cross selling products, as it prepares for a hearing before the Senate Banking Committee regarding the scandal.
Of course, Buffett and Berkshire haven’t actually lost any money until they well the shares, and Buffett has offered no indication he is looking to sell. Shares of Wells Fargo
opened slightly higher on Wednesday, up 0.61%, erasing some of Buffett’s losses.